England and Wales Lands Tribunal

[2001] EWLands RA_43_1998 (26 October 2001)

RA/42&43/1998

LANDS TRIBUNAL ACT 1949

RATING – exemption – clinic for alcohol and drug addiction – treatment by counselling and psychotherapy – whether "training" – Local Government Finance Act 1988 Schedule 5 para 16(1)(a) – held no part of clinic exempt under this provision

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE

NOTTINGHAMSHIRE VALUATION TRIBUNAL

BETWEEN KEITH HALLIDAY Appellant

(Valuation Officer)

and

PRIORY HOSPITAL GROUP OF THE Respondent

NOTTINGHAM CLINIC

Re: Clinic and Premises

The Nottingham Clinic

Ransom Road

Nottingham NG3 5GS

Before: The President

Sitting at 48/49 Chancery Lane, London WC2A 1JR

on 19, 22 and 23 October 2001

The following cases are referred to in this decision:

Minister for Health v Royal Midland Counties Homes for Incurables at Leamington Spa [1954] Ch 530

Reid (VO) v Barking, Havering and Brentwood Community Health Care Trust [1997] RA 385

Chilcott (VO) v Day [1995] RA 285

O'Kelly v Davey (VO) [1996] RA 238

The following additional cases were cited in the course of the hearing:

Evans (VO) v Suffolk County Council [1997] RA 120

Vandyk v Oliver (VO) [1976] AC 659

Little Sisters of the Poor v Morton (VO) [1971] RA 113

Timothy Mould instructed by Solicitor of Inland Revenue for the appellant

Neil King QC instructed by Eversheds, solicitors of Nottingham, for the respondent


 


DECISION

Introduction

1. These appeals relate respectively to the 1990 and 1995 rating list entries of a hereditament described as "Clinic and Premises" and known as the Nottingham Clinic, Ransom Road, Nottingham. The appellant valuation officer contends that the whole of the premises are rateable. The respondent ratepayer seeks to uphold the decision of the Nottinghamshire Valuation Tribunal that the major part of the premises is exempt from rating under para 16(1)(a) of Schedule 5 to the Local Government Finance Act 1988. That provision exempts a hereditament to the extent that it is used wholly for providing facilities for training, or keeping suitably occupied, persons who are disabled or who are or have been suffering from illness. The parties are agreed that if the whole hereditament is rateable it should be entered at £18,500 RV in the 1990 list and £19,000 RV in the 1995 list; and that if part is exempt it should be entered at £1,200 RV in the 1990 list and £1,125 RV in the 1995 list. There is also agreement that the 1990 list entry should have effect from 23 October 1993.
2. The clinic provides remedial facilities for persons suffering from drug or alcohol abuse and addiction. It is situated about 2 miles north-east of Nottingham city centre in a predominantly residential area. It was built in 1989 as a nursing home on the 1-acre site of a former dwelling and was adapted to its present use in 1990. It was established as the Nottingham Clinic by way of partnership between Nottinghamshire District Health Authority and a company called Regency Park Ltd. Ownership passed in 1993 to the Priory Hospital Group. The clinic is constructed on three floors. The ground floor contains the general administration and staff rooms, medical admissions room plus two bedrooms, lounge, dining-room, kitchen, laundry, stores, nursing office and nursing station, and toilets. The first floor comprises 7 bedrooms, 2 bathrooms, a shower room, office and linen stores. The second floor has one bedroom, 2 bathrooms, a meeting room, and a linen store. If exemption applies, it is only the medical admissions room, the two bedrooms and the nurse station on the ground floor that are rateable. These are the rooms used for the reception and detoxification of newly-arrived patients.
3. There is agreement that all those admitted to the clinic are or have been suffering from illness for the purposes of the exemption provision. In each case the illness will be alcohol addiction or drug addiction. The case for the ratepayers, which succeeded in the valuation tribunal, is that once a person has been detoxified (phase 1 of the procedures provided for him) for the rest of his time in the clinic (phase 2) what he receives is group therapy and discussion, counselling and other procedures aimed at helping him to address and cope with his illness; and that these phase 2 procedures are properly described as training. The case for the valuation officer is that phase 2 is not primarily training within the meaning of the provision, but is properly to be regarded as treatment. There was evidence as to the procedures at the clinic, their purpose and their nature from both parties. I will summarise this evidence before moving on to consider the issue of exemption.

The evidence

4. Stephen Daniel Stephens, called on behalf of the ratepayer, is the Clinical Director and has been since October 1996. His first-hand knowledge of the clinic thus dates from a time later than the dates that are material to the appeals, but there is no dispute that the clinic has always been operated in the same way. Mr Stephens, who was formerly a Roman Catholic priest, has a degree in theology and a postgraduate diploma in counselling and spirituality. He is also a Certified Addictions Counsellor.
5. Mr Stephens said that the clinic employed 24-hour qualified nursing cover provided by Registered General Nurses and three professional Addiction Counsellors, in addition to administrative, catering and other staff. The primary duty of the nurses was to monitor and supervise the medically-assisted withdrawal process. They also supported the therapy team with the counselling and education of individuals.
6. When the clinic was established, it was for the purpose of providing a service to the public sector. In the early days Nottinghamshire District Health Authority took 50% of the occupation and other national health service authorities brought it up to 85%. The public/private ratio is now about 65:35. Individuals might refer themselves to the clinic, or they might be referred by drug or alcohol advisory services, or from GPs or via the criminal justice system. There were about 3 to 4 admissions per week. In phase 1, the detoxification phase, a person would occupy a room on the ground floor and be under the care of a nurse. He would spend 3 to 5 days there in the case of alcohol abuse, and up to 14 days in the case of opiates. During phase 1 medication might be given to avoid trauma. An on-call GP would draw up the prescription, and the medication would usually be administered by a nurse under the supervision of the clinical director. Diagnosis of the person's condition was carried out by the consultant psychiatrist, Dr Gill, using the American Psychiatric Association's Diagnostic and Statistical Manual 4^th Revision (DSM-IV)(1994). This was either prior to admission or, more usually, during the detoxification phase. At the end of the detoxification phase a person would be taken off all medication related to his addiction.
7. After detoxification, a person would move to another part of the clinic for phase 2. He would usually be there for 28 days, although the period could be extended to up to 3 months. An activity or treatment plan would be drawn up for each individual, with a specially structured timetable providing for group therapy sessions, individual counselling, diary/inventory writing, study groups, lectures, family education, discussions and assignments. Educational lectures, dealing with problems that individuals might encounter while in the clinic or later in the outside world, were given by professional staff. Group and individual therapy was designed to help individuals gain an insight into themselves and to develop new coping and constructive life skills. It was a goal-focussed process, the goals being abstention and life long sobriety. The objective was to enable the individual to be integrated into society and to enable him to deal with life in the community. The staff were helping residents to develop psychologically and emotionally.
8. Responsibility for an individual during phase 2 lay with the therapeutic team of counsellors and nurses. Dr Gill was a member of the team, but the ultimate responsibility for the patient was not his. He was available to advise staff as necessary, but he was only needed during phase 2 if something extraordinary or non-typical occurred.
9. Discharge took place after the therapeutic team had decided that the resident was ready to leave. After leaving he would be encouraged to return for ongoing therapy in life training. Weekly groups were organised to support participants after the completion of their programme, and they would be asked to attend these groups each week for a minimum of one year after leaving the clinic.
10. Dr D Colin Drummond, MB, ChB, MD, FRCPsych, called on behalf of the valuation officer, is Reader in Addiction Psychiatry in the Department of the Addictive Behaviour and Psychological Medicine at St George's Hospital Medical School, London, and a Consultant Psychiatrist at St George's Hospital, and South West London and St George's Mental Heath Services NHS Trust, London. He is the director of a specialist addiction treatment programme based at Springfield University Hospital, London. He explained the meaning and scope of the terms "drug abuse", "alcohol abuse" and "alcohol dependence" by reference to DSM-IV, the causes and effects of alcohol and drug abuse, and the care and treatment given to abusers. He had not been to the Nottingham clinic, but he expressed views on the nature of the activities undertaken there by reference to a brochure that had been produced for the clinic and Mr Stephens's witness statement.
11. Dr Drummond said that he regarded the programme at Nottingham as essentially a unitary programme with the overall aim of treating addictive disorder. The interventions were principally treatment rather than training or education. Although the bulk of the treatment was provided by non-medical personnel, this did not imply that it was not treatment. It was accurate to describe phase 2 as rehabilitation. His expectation was that patients at the clinic would throughout be under the care of a consultant psychiatrist or other suitable qualified doctor. He would also have expected that a proportion of phase 2 treatment patients would receive medication either as a means of preventing relapse (eg Antabuse, Acamprosate, naltrexone) or as treatment for psychiatric comorbidity (eg antidepressants). He would not regard the clinic's principal function as that of training. Cognitive coping skills training was a psychological treatment as distinct from learning a skill such as how to operate a computer or to drive a car.
12. Dr Christine Westwood, whose doctorate is in social psychology, is Programme Co-ordinator of the Bristol Priory Addictions Facility and Course Director of the Priory Addictions Therapy Diploma Training Programme. She was called on behalf of the ratepayer. She described the Addiction Programme at Bristol Priory and said that its components corresponded very close with those of phase 2 of the Nottingham clinic programme. There was the same focus on cognitive treatment in groups. Goals were achieved by enabling clients to achieve progressive improvement of psychological/ emotional/behavioural/relational function and consequent ongoing enhancement of life-quality. Her view was that, as these techniques were based predominantly on a local learning theory perspective, they were more appropriately described as educational in essence.
13. Pamela Brown, called on behalf of the ratepayer, has been a nurse at the Nottingham Priory clinic since 1994. She said that there had at no stage been a full-time or resident GP or consultant psychiatrist at the clinic which, as a result, was not equipped to deal with emergency cases, unlike the sort of facility Dr Drummond was involved in. A person remained in phase 1 until he was medically stable, and it was extremely rare that he would ever move back to phase 1 from phase 2. Medication in phase 2 was confined to nondetox medication, for example antibiotics or paracetamol. Antabuse, Acamprosate and naltrexone were never used in phase 2, nor were antidepressants. Each patient would be seen by a psychiatrist, either Dr Gill or a Dr Medley, at the stage in phase 1 when the patient was expected to move on to phase 2. Once the psychiatrist had agreed that the patient could move on it was very rare for him to see him again. At phase 2 every patient was allocated a therapist, and during the day the therapist had clinical responsibility for the patient. Generally decisions on a patient were team decisions.

Exemption

14. Paragraph 16 of Schedule 5 to the 1988 Act provides as follows:

"Property used for the disabled

16. (1) A hereditament is exempt to the extent that it consists of property used wholly for any of the following purposes -

(a) the provision of facilities for training, or keeping suitable occupied, persons who are disabled or who are have been suffering from illness;

(b) the provision of welfare services for disabled persons;

(c) the provision of facilities under section 15 of the Disabled Persons (Employment) Act 1944;

(d) the provision of a workshop or of other facilities under section 3(1) of the Disabled Persons (Employment) Act 1958.

(2) A person is disabled if he is blind, deaf or dumb of suffers from mental disorder of any description or is substantially and permanently handicapped by illness, injury, congenital deformity or any other disability for the time being prescribed for the purposes of section 29(1) of the National Assistance Act 1948.

(3) 'Illness' has the meaning given by section 128(1) of the National Health Service Act 1977.

(4) 'Welfare services for disabled persons' means services or facilities (by whomsoever provided) of a kind which a local authority has power to provide under section 29 of the National Assistance Act 1948."

15. The sole question that arises for decision in the present case is whether the procedures applied in the clinic in phase 2 constitute "training" within the meaning of this provision, so that the parts of the clinic used in phase 2 are wholly used for that purpose.
16. Schedule 5 contains a miscellany of exemptions, which derive for the most part from piecemeal legislation over a long period. It is a diverse list – agricultural premises, fish farms, places of religious worship etc, certain property of Trinity House, sewers, property of drainage authorities, parks, property used for the disabled, air-raid protection works, swinging moorings, road crossings over watercourses etc, property in enterprises zones, and visiting forces etc. No assistance in determining the scope of para 16 is to be derived from the company it keeps in Schedule 5. Nor does it seem to me that any help is to be obtained from looking at its legislative forebears – from section 9(1) of the Rating and Valuation (Miscellaneous Provisions) Act 1955 to section 2 of the Rating (Disabled Persons) Act 1978. Paragraph 16(1)(a) is properly to be construed, in my judgment, by reference to the language that is used in it and the provisions in the health service legislation from which, as both counsel agree, it is derived.
17. Mr Neil King QC for the ratepayer draws attention to the relevant definition of the verb "train" in the Oxford English Dictionary. Among 11 principal definitions, this appears:

"6. To subject to discipline and instruction for the purpose of forming the character and developing the powers of, or of making proficient in, some occupation."

There then appear 5 subsidiary meanings. There is no suggestion that any other than the first two are relevant. They are:

"a. To instruct and discipline generally; to educate, rear, bring up.

b. To instruct and discipline in or for some particular art, profession, occupation or practice; to exercise, practice, drill; to make proficient by such instruction and practice."

It is the first of these particular definitions, a, that Mr King relies on. I will return to this later.

18. Section 21 of the National Health Service Act 1977 (as amended) provides for three functions, as described in Schedule 8 of the Act, to be exercisable by local social services authorities. They are:

"(a) care of mothers,

(b) prevention, care and after-care,

(c) home help and laundry facilities."

It is agreed that the particular function in Schedule 8 from which the wording in para 16(1)(a) of Schedule 5 to the 1988 Act is derived is that contained in para 2(1)(b):

"the provision, for persons whose care is undertaken with a view to preventing them from becoming ill, persons suffering from illness and persons who have been so suffering, of centres and facilities for training them or keeping them suitably occupied and the equipment and maintenance of such centres."

19. Mr Timothy Mould for the valuation officer submits in the light of this provision that the target of para 16(1)(a) was the sort of activity one would expect a social services department to be providing in this connection. He originally expressed the activity to be after-care, but he accepted, having heard Mr King's submissions on the point, that this was putting it too narrowly. Mr Mould says that the 1977 Act draws a clear distinction between the provision of institutions for treatment on one hand, and, on the other hand, social services facilities, including training. Section 3(1) of that Act provides:

"(1) It is the Secretary of State's duty to provide throughout England and Wales, to such extent as he considers necessary to meet all reasonable requirements -

(a) hospital accommodation;

(b) other accommodation for the purpose of any service provided under this Act;

(c) medical, dental, nursing and ambulance services;

(d) such other facilities for the care of expectant and nursing mothers and young children as he considers are appropriate as part of the health service;

(e) such facilities for the prevention of illness, the care of persons suffering from illness and the after-care of persons who have suffered from illness as he considers are appropriate as part of the health service;

(f) such other services as required for the diagnosis and treatment of illness."

"Hospital" and "illness" are defined in section 128(1) as follows:

"'hospital' means -

(a) any institution for the reception and treatment of persons suffering from illness,

(b) any maternity home, and

(c) any institution for the reception and treatment of persons during convalescence or persons requiring medical rehabilitation, and includes clinics, dispensaries and out-patient departments maintained in connection with any such home or institution and 'hospital accommodation' shall be construed accordingly.

'illness' includes mental disorder within the meaning of the Mental Health Act 1983 and any injury or disability requiring medical or dental treatment or nursing."

20. Mr Mould refers to Minister for Health v Royal Midland Counties Homes for Incurables at Leamington Spa [1954] Ch 530, in which the Court of Appeal, considering the equivalent definition of "hospital" in section 79(1) of the National Health Service Act 1946, held that an institution for the reception and treatment of persons suffering from a disability requiring nursing was, for those purposes, a hospital. He also refers to Reid (VO) v Barking, Havering and Brentwood Community Health Care Trust [1997] RA 385, a decision of this Tribunal on para 16(1)(b).
21. Mr Mould further draws attention to Part 2 of the Registered Homes Act 1984, which requires the registration of private sector nursing homes and mental nursing homes (section 23). "Nursing home" is defined in section 21(1)(a) to include "any premises used, or intended to be used, for the reception and provision of nursing for persons suffering from any sickness, injury or infirmity". Thus, Mr Mould says, any institution that requires registration as a nursing home under Part 2 of the 1984 Act would be a hospital if provided in the public sector.
22. It is clear from the legislation that there are certain facilities that can be provided either as part of the national health service or by local authority social services. They are, in particular, the care of expectant and nursing mothers (section 3(1)(d), and section 21(1)(a) and Schedule 8 para 1(1) and the prevention of illness, care and after-care (section 3(1)(e), and section 21(1)(b) and Schedule 8 para 2(1). There are limitations. The facilities are only to be provided as part of the health service if the Secretary of State considers it appropriate that they should be (section 3(1)(d) and (e)), and they may only be provided by a local social services authority with the Secretary of State's approval (Schedule 8 para 1(1) and 2(1)). Subject to this, I accept Mr King's submission that, if phase 2 is providing what would be "training" within Schedule 8 para 2(1), such facilities could be provided either as part of the national health service or by a local social services authority.
23. The requirement for the registration of private sector nursing homes seems to me to be of limited significance. As Mr King points out, the Nottingham clinic would require registration on account of its phase 1 facilities, whether or not the phase 2 facilities constituted "the provision of nursing" (section 21(1)(a) of the 1984 Act) (or "treatment by specially controlled techniques" under section 21(1)(c)(v)). I have no doubt that care – as well as treatment – could be provided in a hospital. It is, however, clear that the legislation draws a sharp distinction between treatment and care (see the Home for Incurables case [1954] 1 Ch 530 at 547, per Denning LJ in his dissenting judgment, which, on this point, is not in conflict with the majority judgments). It would appear that treatment for an illness can only be provided in a hospital or a nursing home. A local social services authority could not provide treatment under section 21 of and Schedule 8 to the 1977 Act. No exemption from rating is provided for hospitals and nursing homes, and it is this that forms the basis of the approach urged by Mr Mould, that, if what is provided at the clinic is properly to be regarded as treatment, exemption will not apply. I agree that it is helpful to consider whether what is provided is treatment, but it is right also to bear in mind that the exemption conferred by para 16(1)(a) is substantially narrower than this might imply. Excluded from exemption are premises used for all those other things that a local social services authority (or the national health service) can provide for the care of mothers and the prevention, care and after-care of illness. The exemption is confined to premises used for training and keeping suitably occupied the disabled and those who are or have been ill.
24. There is no doubt in my view that much of what takes place in phase 2 consists of types of function that find some expression in the verb "to train" as it is defined in the OED in meaning 6 a – "To instruct and discipline generally; to educate, rear, bring up." But a dictionary definition is no more than an aid to understanding, and it is not sufficient that some element in the definition of a word should be found to be capable of application to the subject-matter under consideration. Clearly individuals in phase 2 are being instructed and educated about their addictions and how to deal with them. The therapy is cognitive in nature. It seems to me improbable, however, that a person, asked to describe what went on in phase 2, would ever use the word "training" in order to do so. The sort of words used in the clinic's brochures - disease, treatment, patients, therapy - and the word clinic itself indicate what in my view is the essential nature of the premises, as a clinic for the treatment of the illnesses of alcohol and drug addiction. Phase 1 consists of bio-chemical treatment, and phase 2 psychological and behavioural treatment. (I accept the ratepayer's evidence that no drugs related to a patient's addiction were used in phase 2 and that clinical responsibility at phase 2 was not that of the psychiatrist.) The techniques employed at phase 2 are directed towards developing the patient's knowledge and understanding of his illness and fitting him for a normal life free of his addiction, but it does not seem to me that he is being "trained" in the normal, general meaning of that word.
25. However, it is not some normal, general meaning of the verb "to train" that I have to consider. It is the word, as a participle, in a specific context – "training, or keeping suitably occupied, persons who are disabled or who are or have been suffering from illness." In Chilcott (VO) v Day [1995] RA 285, the President, Judge Marder QC, had to consider the meaning of para 16(1)(a) in relation to a claim for exemption for holiday accommodation for the disabled. He said (at 290):

"Turning then to the arguments advanced, I agree with the submission on behalf of the valuation officer that para 16(1)(a) is inapplicable, and for the reasons given by the solicitor for the valuation officer. The exemption given by subpara (a) is to property used wholly for 'the provision of facilities for training or keeping suitably occupied …' disabled persons. In my judgment the phrase 'keeping suitably occupied' requires to be read eiusdem generis with 'training' so as to impart the sense of providing 'training or occupation'. An obvious example would be a facility for encouraging or furthering a hobby such as needlework, music or woodcraft. I do not see that the provision of a holiday cottage can fall into this category."

26. In O'Kelly v Davey (VO) [1996] RA 238 the Member, Judge Rich QC, had to consider the provision in relation to a workshop and stores adjacent to a disabled person's home. He said (at 243):

"I think that the meaning of 'suitably occupied' must be understood from the context of its juxtaposition to 'training'. In this I agree with the approach to construing the words which was adopted by the President in Chilcott (VO) v Day."

27. In both these cases the Tribunal was concerned with the "keeping suitably occupied" part of the provision, but it is clearly implicit in the President, Judge Marder QC's decision that he regarded the "training" part as indicating training for a particular occupation. I am of the same view. In my judgment, "training" in para 16(1)(a) is clearly used in the more specific of the two subsidiary meanings referred to by Mr King – 6 b: instruction for some particular occupation or practice. What is in contemplation is the training of a person who is disabled or who is or has been ill so that he can occupy himself in a way that is suitable to his condition. The provision does not extend to training of a general sort designed to make an individual fit for a normal life in the sense relied on by the ratepayer, and it is clear that the clinic is not providing training for particular occupations.
28. In my judgment, therefore, no part of the appeal hereditament is exempt from rates. The appeals are accordingly allowed. The entry in the 1990 list must be amended to £18,500 RV with effect from 23 October 1993. The entry in the 1995 list must be amended to £19,000 RV. Submissions are invited on costs, and this decision will only take effect when the question of costs has been determined.

Dated 26 October 2001

George Bartlett QC, President

ADDENDUM ON COSTS

29. The valuation officer asks for his costs. The respondent accepts this with one exception. Solicitors for the respondent say that the appellant amended his statement of case to contend that the original proposals were invalid. Those contentions were eventually not pursued, but costs, including the taking of counsel's opinion and submitting a reply to the re-amended statement of case, had been incurred by the respondent before the points were withdrawn. The solicitors say that the appellant should pay the respondent's costs of and occasioned by the invalidity submissions. No representations from the appellant have been received in reply.
30. I am satisfied that the respondent should pay the appellant's costs of the appeal, except in relation to the appellant's invalidity contentions, the costs of and occasioned by which must be paid by the appellant. Both sets of costs if not agreed are to be the subject of a detailed assessment by the Registrar on the High Court standard basis.

Dated 22 November 2001

George Bartlett QC, President